Acct Test 3

The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as a. solvency. b. financial flexibility. c. liquidity. d. exchangeability.

liquidity

The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as a. solvency.b. financial flexibility.c. liquidity.d. exchangeability.

liquidity

rtemis Inc.'s trial balance before year-end adjustments included the following $ balances: Sales revenue.................................1,700,000 credit Sales returns and allowance........... 56,000debit Accounts receivable........................ 172,000 debit Allowance for doubtful accounts...... 3,040 credit If the estimate of uncollectible accounts is 5% of gross accounts receivables, the amount of Bad Debt Expense adjustment needed at year-end is a. $8,448.b. $5,560.c. $8,600.d. $11,640.

5560

Lester Company received a seven-year zero-interest-bearing note on February 22, 2025 in exchange for property it sold to Porter Company. There was no established exchange price for this property and the note has no ready market. The prevailing rate of interest for a note of this type was 6% on February 22, 2025, 6.5% on December 31, 2025, 6.7% on February 22, 2026, and 7% on December 31, 2026. What interest rate should be used to calculate the interest revenue from this transaction for the years ended December 31, 2025 and 2026, respectively? a. 0% and 0%b. 6% and 6%c. 6% and 7.7%d. 6.5% and 7%

6% and 6%

Laventhol Corporation had accounts receivable of $100,000 at 1/1. The only transactions affecting accounts receivable were sales of $1,050,000 and cash collections of $1,000,000. Laventhol's accounts receivable turnover is a. 7.0.b. 7.7.c. 8.4.d. 10.5.

8.4

On July 22, Petrie Inc. sold $30,000 of inventory items on credit with the terms 2/15, net 30. The customer paid down half of its outstanding receivable on August 1. The customer paid the remaining balance of its outstanding receivable on August 12. Assuming Petrie uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received? a. DR. Cash...................................14,700DR. Sales Discount........................300 CR. Accounts Receivable.............15,000 b. DR. Cash.....................................15,000 CR. Accounts Receivable................15,000 c. DR. Cash....................................14,700 CR. Accounts Receivable...............14,700 d. DR. Accounts Receivable...................300CR. Sales Discount Forfeited............300

A.

Which of the following is included in an owners' equity section reported in the balance sheet? A. Additional paid-in capital. B. Dividends. C. Working capital. D. Accumulated capital.

Additional paid in capital

The beginning balance of Accounts Receivable for George Company was $25,000. Net sales (all on account) for the year amounted to $200,000. The Company does not offer any cash discount. During the year $180,000 was collected on accounts receivable. The accounts receivable turnover is a. 5.7 times.b. 5.1 times.c. 4.4 times.d. 8.0 times.

(200,000-180,000=20,000+25,000=45,000) (45,000+25,000)/2= 35,000. 200,000/35,000=5.7 times

Microgreens, Inc. reports the following information for the current period: Purchase of land $ 750,000 Sale of farm land 820,000 Sale of farm house, buildings 990,000 Construction of greenhouse facilities 1,925,000 Sale of farming equipment 288,000 Microgreens should report net cash provided by (used by) investing activities of a. $3,735,000.b. ($ 577,000).c. ($1,105,000).d. $1,155,500.

(577,000)

Geary Co. assigned $1,600,000 of accounts receivable to Kwik Finance Co. as security for a loan of $1,340,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $440,000 on assigned accounts after deducting $1,520 of discounts. Geary accepted returns worth $5,400 and wrote off assigned accounts totaling $11,920. The amount of cash Geary received at the time of the assignment was a. $1,206,000.b. $1,308,000.c. $1,313,200.d. $1,340,000.

1,313,200

Before year-end adjusting entries, Dunn Company's account balances at December 31, 2025, for accounts receivable and the related allowance for uncollectible accounts were $1,500,000 and $90,000, respectively. An aging of accounts receivable indicated that $125,000 of the December 31 receivables are expected to be uncollectible. At December 31, 2025, the net realizable value (NRV) of accounts receivable is a. $1,465,000.b. $1,375,000.c. $1,285,000.d. $1,410,000.

1,375,000

Transport Corporation reports the following information for the current period: Sale of office building $1,300,000 Purchase of building 650,000 On May 1, borrowed at 5% interest 700,000 Sale of equipment 800,000 Transport should report net cash provided by investing activities of a. $1,450,000.b. $1,150,000.c. $150,000.d. $2,150,000.

1,450,000

Jenny Manufacturing Company sold toys listed at $360 per unit to Jackson, Inc. for $306, which included a trade discount of 15 percent. Jackson, in turn, sells the toys at a holiday market for $335 each. Jenny should record the receivable and related sales revenue (per unit) at a. $360.b. $335.c. $306.d. $285.

306

Sheridan Company's average collection period is 46 days and its net sales are $2434000. What are Sheridan Company's average accounts receivables for the period? (Use 365 days for calculation. Round intermediate calculations to 1 decimal place, e.g, 5.3.) $205422. $52913. $6698. $308101.

308101.

Wilton Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what amount of bad debt expense will be reported on Wilton's income statement? a. $ 402,000.b. $ 390,000.c. $1,440,000.d. $ 378,000.

378,000

Presented below are data for Bangkok Corp. 2025 2026 Assets, January 1 $8,850. $9,720 Liabilities, January 1 4,860. ? Stockholders' Equity, Jan. 1. ? ? Dividends 1,620. 1,215 Retained Earnings, Jan. 1. ? ? Stockholders' Equity, Dec. 31. ? ? Net Income 1,920 1,296 Stockholders' Equity at January 1, 2026 is a. $5,748.b. $3,990.c. $4,290.d. $5,910.

4,290

Sauder Corporation reports the following information for the current period: Net income $380,000 Depreciation expense 70,000 Increase in accounts receivable 30,000 Sauder should report cash provided by operating activities of a. $280,000.b. $340,000.c. $420,000.d. $480,000.

420,000

Lohmeyer Corporation reports: Cash provided by operating activities $320,000 Cash used by investing activities 110,000 Cash provided by financing activities 140,000 Beginning cash balance of 90,000 What is Lohmeyer's ending cash balance? a. $410,000b. $440,000c. $570,000d. $660,000

440,000

WVA Mining Corporation reports the following information for 2026: Purchased 5,000 shares of their own stock $500,000 Issuance of bonds 260,000 Purchase of land for new office location 550,000 On July 1, Borrowed at 6% interest 700,000 WVA should report net cash provided by (used by) financing activities of a. $1,460,000.b. ($481,000).c. $460,000.d. $940,000.

460,000

Vasquez Corporation had a Jan.1, 2025 balance in the Allowance for Doubtful Accounts of $40,000. During 2025, it wrote off $28,800 of accounts and collected $8,400 on accounts previously written off. The balance in Accounts Receivable was $800,000 at Jan. 1, 2025 and $960,000 at Dec. 31, 2025. At Dec. 31, 2025, Vasquez estimates that 5% of accounts receivable will prove to be uncollectible. What should McGlone report as its Allowance for Doubtful Accounts at 12/31/25? a. $8,000.b. $28,400.c. $36,800.d. $48,000.

48,000

Black Cat Company began the year with a credit balance in the Refund Liability account of $48,000. Credit sales during the year were $725,000. Black Cat customers made cash payments on account of $694,000. During the year, customers returned $36,000 worth of goods. Black Cat estimates that 6% of credit sales will be returned. What is the balance in Black Cat's Refund Liability account at the end of the year? a.127,500b. $55,500c. $43,500d. $53,640

55,000

AG Inc. made a $25,000 sale on account with the following terms: 2/10, n/30. If the company uses the net method to record sales made on credit, what is/are the debit(s) in the journal entry to record the sale? a. Debit Accounts Receivable for $24,500 b. Debit Accounts Receivable for $24,500 and Sales Discounts for $500 c. Debit Accounts Receivable for $25,000 d. Debit Accounts Receivable for $25,000 and Sales Discounts for $500

debit accounts receivable for 24500

What is the normal journal entry for recording bad debt expense under the allowance method? a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts

debit bad debt expense credit allowance for doubtful accounts.

What is the normal journal entry for recording bad debt expense under the allowance method? a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts

debit bad debt expense, credit allowance for doubtful accounts

Equestrian Roads sold $120,000 of goods and accepted the customer's $120,000 10%, 1-year notes receivable in exchange. Assuming 10% approximates the market rate of return, what would be the debit in this journal entry to record the sale? the present value of an ordinary annuity of 1 at 10% for 1 year is 0.90909 the present value of an ordinary annuity of 1 at 10% for 2 years is 1.73554 the present value of a single-sum of 1 at 10% for 1 year is 0.90909 the present value of a single-sum of 1 at 10% for 2 years is 0.82645 a. No journal entry until cash is collected b. Debit Notes Receivable for $120,000 c. Debit Accounts Receivable for $120,000 d. Debit Notes Receivable for $108,000

debit notes receivable for 120,000

The first step in preparing the statement of cash flows is to: determine the cash provided by or used in investing and financing activities. determine the change in cash during the period. reconcile the change in cash with the beginning and the ending cash balances. determine the cash provided by or used in operating activities.

determine the cash provided by or used in operating activities

Balance sheet information is useful for all of the following except a. assessing a company's risk b. evaluating a company's liquidity c. evaluating a company's financial flexibility d. determining free cash flows.

determining cash flows

Which of the following statements regarding the statement of cash flows is incorrect? A. Due to its format and level of detail, most individuals have difficulty comprehending the information reported in the statement of cash flows. B. The statement of cash flows presents a detailed summary of all the cash inflows and outflows, or the sources and uses of cash during the period. C. The income statement, the statement of stockholders' equity, and the balance sheet each present some information about the cash flows of an enterprise during a period. D. The statement of cash flows reports the following: (1) the cash effects of operations during a period, (2) investing transactions, (3) financing transactions, and (4) the net increase or decrease in cash during the period.

due to its format and level of detail, most individuals have difficulty comprehending the information reported in the statement of cash flows

When the stated rate does not equal the market rate at the date of issuance, the entry to record the issuance of the note will include a. either a credit to Discount on Notes Receivable or a debit to Premium on Notes Receivable. b. credits to Notes Receivable and Interest Receivable. c. either a debit to Discount on Notes Receivable or a credit to Premium on Notes Receivable. d. a debit to cash and a credit to Notes Receivable for the face amount of the note.

either a credit to discount on notes receivable or debit to premium on notes receivable

Payment of dividends would come under which activity on the statement of cash flows? Financing. Operating. Investing. None of these answer choices are correct.

financing

Borrowing money from creditors and repaying the amounts borrowed are financing activities. liquidity activities. investing activities. operating activities.

financing activities

Which of the following would not be classified as a long-term investment on the balance sheet? a. Cash surrender value of life insurance b. Franchise c. Land held for speculation d. A sinking fund

franchise

The current assets section of the balance sheet should include a. machinery. b. patents. c. goodwill. d. inventory.

inventory

In a sale without recourse, the seller A. recognizes a Loss on the Sale of Receivables for the difference between the proceeds and the provision for probable adjustments. B. debits Accounts Receivable for the face value of the receivables sold. C. assumes responsibility for any credit losses. D. is an outright sale both in form and substance.

is an outright sale both in form and substance

The accounts receivable turnover ratio is computed by dividing net sales by average net receivables. net sales by ending net receivables. gross sales by ending net receivables. gross sales by average net receivables.

net sales by average net receivables

The accounts receivable turnover ratio measures the percentage of accounts receivable arising during certain seasons. number of times the average balance of accounts receivable is collected during the period. number of times the average balance of inventory is sold during the period. percentage of accounts receivable turned over to a collection agency during the period.

number of times the average balance of accounts receivable is collected during the period

Current assets are presented in the balance sheet in a. ascending order of their balances. b. descending order of their balances. c. order of their liquidity. d. reverse order of their liquidity.

order of their liquidity

long-term liabilities include all of the following except a. obligations not expected to be liquidated within the operating cycle. b. obligations payable at some date beyond the operating cycle. c. deferred income taxes and most lease obligations. d. accrued interest on bonds payable.

accrued inetrest on bond payable

Long-term liabilities include all of the following except a. obligations not expected to be liquidated within the operating cycle. b. obligations payable at some date beyond the operating cycle .c. deferred income taxes and most lease obligations. d. accrued interest on bonds payable.

accrued interest on bonds payable

Which of the following should be reported for capital stock? a. The shares authorized b. The shares issued c. The shares outstanding d. All of these answer choices are correct.

all od these answer choices are correct

The amount of consideration that a company expects to receive from a customer in exchange for transferring goods or services is a. the transaction price. b. an amount specified and determined in the contract. c. easily determined because it is a fixed amount. d. all of these answers are correct.

all of the above

Receivables may be classified as all of the following except: A. current or noncurrent. B. accounts receivable or notes receivable. C. all the answer options list possible classifications. D. trade receivables or nontrade receivables.

all of the following options are possible

On a classified balance sheet, which of the following should a company report separately? Assets that differ in their type or expected function. Assets and liabilities with different implications for the company's financial flexibility. Assets and liabilities with different general liquidity characteristics. All of these answer choices are correct.

all of these answer choices are correct

Major limitations of the balance sheet include all of the following except: judgments and estimates are used to determine many of the items reported. it necessarily omits many items that are of financial value but cannot be recorded objectively. most assets and liabilities are reported at historical cost. only amounts known with absolute certainty are reported.

only amounts known with absolute certainty are reported

Alli ordered ceiling tiles online from Lowes and charged the purchase to her Lowes credit card. Lowes will deliver the ceiling tiles the next day. Evidence that transfer of control from Lowes to Alli is complete is indicated by all of the following except a. Lowes has the right to receive payment from Alli. b. Alli has physical possession of the goods. c. the period in which the ceiling tiles can be returned has expired. d. Alli has inspected the ceiling tiles and has approved that the quantity is correct and the quality is acceptable.

the period in which the ceiling tiles can be returned has expired

At the issuance date (t = 0), the carrying value of a note is calculated as... a. the principal amount of the note plus the total interest to be received. b. the present value of the principal amount of the note plus the present value of the annuity of interest receipts. c. the principal amount of the note plus the present value of the discount on notes receivable. d. the present value of the total interest to be received plus the discount on notes receivable.

the present value of the principle amount of the note plus the present value of the annuity of interest receipts

Olmsted Company has the following items: Preferred Stock, $50,000, common stock, $900,000; treasury stock, $105,000; Employee Benefit Obligations, $125,000 and retained earnings, $454,000. What total amount should Olmsted Company report as stockholders' equity? a. $1,174,000.b. $1,299,000.c. $1,424,000.d. $1,549,000.

1,299,000

Allen Enterprises reports the following information: Net income $5210000 Depreciation expense 708560 Increase in accounts payable 163000 Increase in accounts receivable 309000 Allen should report cash provided by operating activities of $4029440. $5772560. $5210000. $6390560.

$5772560

On February 1, 2025, Henson Company factored receivables with a carrying amount of $700,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Assume that Henson factors the receivables on a with recourse basis and that the recourse obligation has a fair value of $3,500. The loss to be recorded on this transaction is a. $21,000.b. $24,500.c. $35,000.d. $59,500.

24,500

Sunny Rock Inc. assigns $6,000,000 of its accounts receivables as collateral for a $2 million 8% loan with a bank. Sunny Rock also pays a finance fee of 1% on the amount of accounts receivable. What would be recorded as a loss on the transfer of receivables? a. Loss of $60,000b. Loss of $480,000c. Loss of $540,000d. $0

0

On December 31, 2021 Crane Company sold land having an original cost of $122,200 in exchange for the following: $28200 down payment $56400 payable on December 31, 2022 and December 31, 2023 The agreement of sale made no mention of interest; however, 8% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2021 rounded to the nearest dollar? the present value of an ordinary annuity of 1 at 8% for 1 year is 0.92593 the present value of an ordinary annuity of 1 at 8% for 2 years is 1.78326 the present value of a single-sum of 1 at 8% for 1 year is 0.92593 the present value of a single-sum of 1 at 8% for 2 years is 0.85734 $128776. $100576. $217914. $122200

100576

On December 31, 2021 Crane Company sold land having an original cost of $122,200 in exchange for the following: $28200 down payment $56400 payable on December 31, 2022 and December 31, 2023 The agreement of sale made no mention of interest; however, 8% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2021 rounded to the nearest dollar? the present value of an ordinary annuity of 1 at 8% for 1 year is 0.92593 the present value of an ordinary annuity of 1 at 8% for 2 years is 1.78326 the present value of a single-sum of 1 at 8% for 1 year is 0.92593 the present value of a single-sum of 1 at 8% for 2 years is 0.85734 $128776. $100576. $217914. $122200.

100576

On December 31, 2025, Flint Corporation sold land having an original cost of $120,000. The terms of the sale were as follows: $30000 down payment $60000 payable on December 31, 2026 and December 31, 2027 The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2025 rounded to the nearest dollar? the present value of an ordinary annuity of 1 at 9% for 1 year is 0.91743 the present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911 the present value of a single-sum of 1 at 9% for 1 year is 0.91743 the present value of a single-sum of 1 at 9% for 2 years is 0.84168 a. $105,547b. $135,546.c. $120,000.d. $211,092.

105,547

Shelton Company has the following account $ balances at year-end: Accounts receivable....................... 140,000 Allowance for doubtful accounts..... 7,200 Sales discounts.............................. 4,800 Shelton should report net realizable value (NRV) of its accounts receivable at an amount of... a. $128,000.b. $132,800.c. $135,200.d. $140,000.

132,800

Fulton Company owns the following investments: Trading securities (fair value) $160,000 Available-for-sale securities (fair value) 70,000 Held-to-maturity securities (amortized cost) 94,000 Fulton will report investments in its current assets section of a. $0. b. $160,000. c. $160,000. or an amount greater than $160,000, depending on the circumstances. d. $230,000.

160,000. or an amount greater than 160,000 depending on the circumstances

Which of the following pairings of an item and a basis of valuation is incorrect? Cash - Fair value. Short-term investments - Generally Fair value. Prepaid expenses - Cost. Receivables - Lower-of-cost-or-market.

Recvibales- lower-of-cost-or-market

Which of the following would be classified in a different major section of a balance sheet from the others? a. Capital stock b. Stock investments c. Additional paid-in capital d. Accumulated other comprehensive incom

stock investments

A company with a _________________ is better able to survive bad times, to recover from unexpected setbacks, and to take advantage of profitable and unexpected investment opportunities. a low degree of liquidity a low degree of solvency low degree of financial flexibility a high degree of financial flexibility

a high degree of financial flexibility

The balance sheet is useful for analyzing all of the following except liquidity. financial flexibility. solvency. profitability.

profitability

Treasury stock should be reported as a(n) a. current asset. b. investment. c. contra asset. d. reduction of stockholders' equity.

reduction of stockholders equity.

The most common balance sheet format which lists liabilities and stockholders' equity directly below assets is called the: A. financial position form. B. solvency form. C. report form. D. account form.

report form

In preparing a statement of cash flows, which of the following transactions would be considered an investing activity? a. Sale of damaged manufacturing equipment b. Sale of $2m in merchandise on credit c. Declaration of a cash dividend d. Issuance of bonds payable at a discount

sale of damaged manufacturing equipment

____________ is the ability of a company to pay its debts as they mature. Financial flexibility Insolvency Solvency Liquidity

solvency

The statement of cash flows provides answers to all of the following questions except What was the change in the cash balance during the period? Where did the cash come from during the period? What is the impact of inflation on the cash balance at the end of the year? What was the cash used for during the period?

what is the impact of inflation on the cash balance at the end of the year?